Bitmine chairman Tom Lee responded to a discussion about the company’s unrealized losses on the Ethereum treasury, claiming it was part of the design.
BitMine’s Ethereum holdings have suffered significant losses after the crash
The digital asset sector has been on a steep decline over the past week, with Ethereum being one of the hardest-hit assets, down nearly 25%. As a result of this withdrawal, BitMine, the largest corporate holder of ETH, witnessed a significant reduction in its reserves.
BitMine is still relatively new to the finance space, having only adopted Ethereum on its balance sheet in June of last year. Despite the short time it has had to implement this strategy, the company has already accumulated a significant amount of cryptocurrencies. As of Monday’s press release, BitMine holds 4,285,125 ETH, representing 3.55% of the total supply of assets in circulation.
However, since BitMine started buying right after the ETH bull run, many of its tokens were purchased at much higher levels than today. The company’s holdings have already been pushed into losses by the market downturn caused by rising prices, and the recent price crash has exacerbated those losses.
Discussions related to BitMine’s over $6 billion in unrealized Ethereum losses have started circulating on social media, with some users criticizing the financial company. Chairman Thomas “Tom” Lee addressed this topic in a post on X and quoted and reposted one such user.
Lee said this criticism “misses the point of the Ethereum Treasury,” explaining that BitMine is designed to track the ETH price and outperform it throughout the cycle. He added that due to the current market weakness, unrealized losses on the company’s holdings are expected during these periods.
The chairman insisted that this was not a bug, but rather a “feature.” He compared the company’s situation to that of index exchange traded funds (ETFs), saying, “Why don’t we look at the losses in all index ETFs?”
Amid this downward trend, BitMine is promoting staking and rapidly securing the supply of Ethereum staking contracts to generate passive income. To date, the company has staked 2,897,459 ETH, which is approximately 67% of its holdings.
The recent market downturn has been so severe that even long-established strategies are under threat to their profitability, with Bitcoin currently trading almost on a cost basis. Strategy is the world’s largest digital asset treasury company, holding 713,502 BTC, but a loss of $76,000 in cryptocurrencies would wipe out those $54.3 billion holdings.
ETH price
Ethereum fell to the low $2,100s on Tuesday, but Ethereum has since rebounded to $2,250.
The trend in the price of the coin over the last five days | Source: ETHUSDT on TradingView
Featured image from Dall-E, chart from TradingView.com
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